Baby Food in China

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Executive Summary

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TRENDS

Officially executed in October 2015, the second-child policy started to greatly impact baby food by the end of 2016 and its positive effect is expected to be fully seen in 2017, bringing retail value sales to be higher than in 2016. With 18 million new births in 2016, the baby population in China is growing further at an accelerating rate in 2017, implying greater expansion of China’s baby food. Directly responding to the rising new births, provisional current value sales of baby food products climbed further at 9% in 2017 owing to the growing demand among consumers.

COMPETITIVE LANDSCAPE

Shanghai Wyeth Nutritional Co Ltd further consolidated its leading position with a value share of 13% in 2017, mainly thanks to its consistent development in premium and super-premium product series to meet the growing demand among consumers for products of higher quality and nutrients. Consisting of three series including S-26 Gold, S-26 Ultima and illuma of mass, premium and super-premium milk formula products, respectively, Wyeth has gradually shifted its focus onto the latter two series, illuma in particular, to adapt to the consumption upgrades among Chinese consumers. Featuring an OPO structure to greatly improve the absorption of nutrients by babies and an Irish milk source to guarantee the products’ premium quality, illuma has managed to maintain its position as the most popular baby food brand in China since 2015.

PROSPECTS

In baby food, a value CAGR of 6% is expected over the forecast period to reach sales of CNY196.0 billion at constant 2017 prices in 2022, which, however, is lower than the value growth in 2017. Considering that the positive effect of the second-child policy will be fully realised in 2017 and 2018 and then gradually wane, the demand for baby food excited by new births is estimated to grow at a decelerating rate during the forecast period. Dried, prepared and other baby food, nevertheless, will grow at much higher rates than milk formula, in terms of their small bases as niche product categories in Chinese baby food. Within milk formula, special baby milk formula, represented by free from lactose and HA milk formula, along with organic milk formula, is predicted to witness strong value growth during the forecast period as well, thanks to the increasingly strengthened awareness of health and wellness among consumers and more advanced knowledge of baby care.

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